By Bob Schwartz, CRS, GRI, San Diego real estate
broker
�2007
Broker For You
All rights reserved.
Everyone in San Diego knows that you should never sign on the dotted line
without first reading the contract. The same is true with loans. Signing a loan
without knowing the conditions and what everything means can be damaging to your
finances, credit, and future investments. Before you sign anything, make sure
that you know the following terms and how they will apply to you.
1. Interest rate. The percentage of your loan that is added to the total that
you owe every month is called your interest rate. The percentage will differ
according to the economy and will affect your payments.
2. Fixed Rate. This is an interest rate that continues at the same percentage
throughout the entire time-span of your loan.
3. Variable Rate. A variable rate will adjust following the economy and the
charts that are stating what the rate amount should be. This type of rate
generally changes annually and adjusts according to a particular given range of
percentages.
4. Principal. The principal is what you will be paying on your actual house and
whatever you pay on your principal is what you will view in the end as your
investment.
5. Escrow. This is close to a savings account for your loan. Whatever you put in
escrow will build up without paying directly into the loan. At the finish of the
term you can use it to finish paying off the loan or to invest in another loan.
6. Title. A title will be your claim to your home after it is legitimately
yours. It concedes that the property is yours.
7. Deed. A deed is usually used as a title for a commercial area. Instead of
declaring ownership it shows that the property is leased to the one who is using
it as a business.
8. Home Equity. This is a loan or line of credit that you can get for your home.
It will finance up to eight percent of your other loan and be reimbursed back
later. This helps you if you want to consolidate loans or invest more into the
property.
9. Appraisal. After an inspection of the home is made, there will be an
appraisal. This will be a ballpark value of what the home is worth.
10. Equity. This is the actual amount of the property that you own. In most
cases, this is what is being paid off of your principal amount.
After you've mastered these fundamental terms, you will be able to expand on
your knowledge and find the right loan to meet your needs. These fundamental
concepts will help you in making the right decision for the type of loan that
you want.
ABOUT THE AUTHOR
Bob Schwartz, is a Certified Residential Specialist, CA licensed real estate
broker with www.Brokerforyou.com. Bob
has over 27 years of residential real estate experience, authored a number of
published articles and served as an expert witness for
San Diego legal firms. You can contact Bob via
e-mail at brokerforyou@gmail.com or visit his highly popular
San Diego real estate website at:
http://www.brokerforyou.com
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